UK Retail Sales Plunge to 40-Year Low as Iran Conflict Fuels Inflation Concerns

A Confederation of British Industry (CBI) survey released on 27 April shows the monthly retail sales volume index fell to –68 in April, down from –52 in March. The reading is the lowest since the series began in 1983. Seventy-seven percent of the 61 surveyed retail chains reported year-on-year sales declines, while only nine percent recorded growth. Expectations for May slipped further to –60, the most pessimistic level since March 2021. The index, which aggregates reported sales volumes from participating retailers, fell by 16 points in a single month, underscoring the speed of the contraction.

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The downturn accelerated after the United States and Israel launched attacks on Iran on 28 February, prompting the temporary closure of the Strait of Hormuz, a key artery for global oil shipments. The Strait of Hormuz closure disrupted global oil flows, prompting higher fuel prices that fed into broader price pressures felt by UK households. The resulting uncertainty heightened household inflation concerns in the United Kingdom. Concurrently, Britain’s longest-running consumer-confidence gauge, conducted by market-research firm GfK, fell to its lowest level since October 2023, and a separate CBI manufacturers’ survey indicated the weakest optimism since the start of the COVID-19 pandemic.

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In addition to the –68 index, the related “sales quality” measure, which asks retailers to rate sales as good, bad or normal for the season, fell to –32 in April from –23 in March, a level not seen since June 2025. The survey, covering responses collected between 26 March and 14 April, reflects a broad contraction across the sector. The GfK confidence index’s decline reinforces the link between macro-economic pressures and retail performance.

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CBI economist Martin Sartorius warned that the economic impact of the Iran conflict is becoming clearer and that firms will look to the government to address cost-of-living pressures by tackling business costs. The CBI simultaneously urged the government to halt new employee-rights legislation that could raise employer costs, to reduce commercial property taxes, and to lower electricity bills for retailers.

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• “Some retailers reported that weak consumer confidence was weighing on spending in April,” — Confederation of British Industry

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• “With the economic impact of the Iran conflict becoming clearer, firms will be looking to government to recognise that easing cost of living pressures depends on tackling the cost of doing business,” — Martin Sartorius, CBI economist

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The May outlook index of –60 signals continued contraction, echoing the low level recorded in early 2021. The CBI expects firms to intensify lobbying for fiscal relief, particularly in the areas of employee-rights costs, property taxation, and energy pricing. Government response to these requests will shape the trajectory of retail activity in the coming months.

Reuters